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Pride in House as fintech legislation passed

Banking pledge: Wayne Caines says partner will be found (Photograph by Blaire Simmons)

Legislation designed to make Bermuda a world leader in financial technology was passed by MPs yesterday.

David Burt, the Premier and finance minister, said the Digital Asset Business Act came in the wake of a law to regulate initial coin offerings, which was passed in the Senate last month.

Mr Burt explained that the new law would give powers to the Bermuda Monetary Authority to regulate people conducting digital asset business and for the protection of their clients.

He told the House of Assembly: “All Bermudians should be proud of the progress that we as a country have made over the last ten months in the fintech space.

“Prior to this government’s election, Bermuda was a near afterthought in the world of fintech.

“Today, we become a global leader in fintech regulation and have 15 fintech companies already incorporated in Bermuda with more to follow.”

Mr Burt added that memorandums of understanding had been signed with “some of the largest fintech companies in the world”.

He said several companies would visit the island this month to start setting up their operations.

Jeanne Atherden, Leader of the Opposition, said she supported the legislation but stressed the need for sustainability and job creation in the fintech industry.

Ms Atherden said: “If we are looking at it being a third pillar, it’s going to be very important for the people of Bermuda to be assured that there is growth in this industry and sustainability.”

She also called for more information on job creation and training to prepare Bermudians to take top-level jobs in the industry.

Cole Simons, the Shadow Minister of Education and Workforce Development, raised concerns over how the fintech industry would tie in with the island’s banking sector and whether Bermuda could deliver on what it had promised.

He said: “We all know for a business to thrive and operate, we need to have a banking system in place to support this endeavour.”

Mr Simons, who works for Bank of Butterfield, added: “I am under the impression that Bermuda’s Banking Association has taken a cautious approach to this industry and that there is no one on this island that has committed to banking this industry.”

Wayne Caines, the Minister of National Security, said: “We will not be limited or encumbered because the local banks do not want to play in this space.”

Mr Caines added: “A big part of this technology is the ability to conduct business without the use of banks. Of course the people in the banking world would speak out against this.

“Of course we will have to work out a banking partner for the exchange-based business and that is something that is a work in progress.”

Mr Caines said there was a difference between “legitimate concerns and white noise”.

He said one legitimate concern is over people who would use the industry for illegitimate purposes, but he added that the Digital Asset Business Act aimed to set up a ring of steel around the island industry.

Mr Caines said: “We will produce regulatory supervision with a two-tiered licensing system. We will provide compliance of anti-money-laundering and antiterrorism financing protocols. We will make sure there is consumer fraud protection. There will be penalties for price manipulation.

“There will be licensing qualifications, which include a requirement for only fit and proper persons to conduct digital asset business activities from within Bermuda.”

He added: “We are doing this because we must assure the people of Bermuda that this will be a safe environment, that they will be in keeping with the best standards and the best practice internationally.”

Michael Dunkley, the Shadow Minister of National Security, told the House of Assembly that 80 per cent of cryptocurrencies are run by “fraudsters and scamsters”.

He added: “Only eight per cent of those ICOs that actually make it to market are successful. That makes it of utmost importance that we get it right.”

Mr Dunkley said with Bermuda under “constant scrutiny” there had to be “transparency and accountability”.

He added: “I think it’s important that as the Government moves forward there is a clear understanding of how we are going to deal with this heightened level of secrecy that usually takes place in these types of transactions.”

Mr Burt said that nothing was more anonymous than cash.

He added: “I can assure you this is less anonymous than cash.”